Lufax Holding Ltd's Dividend Analysis

GuruFocus Research

Tue, Jun 4, 2024, 5:05 AM 3 min read

Exploring the Sustainability and Prospects of Lufax Holding Ltd's Dividend Payments

Lufax Holding Ltd (NYSE:LU) recently announced a dividend of $2.42 per share, payable on 2024-08-06, with the ex-dividend date set for 2024-06-04. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Lufax Holding Ltd's dividend performance and assess its sustainability.

What Does Lufax Holding Ltd Do?

Warning! GuruFocus has detected 6 Warning Signs with LU.
High Yield Dividend Stocks in Gurus' Portfolio
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?

Lufax Holding Ltd is a technology-empowered personal financial services platform in China. The company addresses the large unmet demand for personal lending among small business owners as well as salaried workers in China, and provides tailor-made wealth management solutions to China's middle class and affluent population. Its platform has two hubs namely Retail Credit Facilitation Hub and Wealth Management Hub.

A Glimpse at Lufax Holding Ltd's Dividend History

Lufax Holding Ltd has maintained a consistent dividend payment record since 2022. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Breaking Down Lufax Holding Ltd's Dividend Yield and Growth

As of today, Lufax Holding Ltd currently has a 12-month trailing dividend yield of 3.54% and a 12-month forward dividend yield of 57.67%. This suggests an expectation of increased dividend payments over the next 12 months. Based on Lufax Holding Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Lufax Holding Ltd stock as of today is approximately 3.54%.

The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-03-31, Lufax Holding Ltd's dividend payout ratio is 17.78, which may suggest that the company's dividend may not be sustainable. Lufax Holding Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Lufax Holding Ltd's profitability 3 out of 10 as of 2024-03-31, suggesting the dividend may not be sustainable. The company has reported net profit in 7 years out of the past 10 years.

Growth Metrics: The Future Outlook

To ensure the sustainability of dividends, a company must have robust growth metrics. Lufax Holding Ltd's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Revenue is the lifeblood of any company, and Lufax Holding Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Lufax Holding Ltd's revenue has decreased by approximately -17.40% per year on average, a rate that underperforms approximately 86.73% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Lufax Holding Ltd's earnings decreased by approximately -60.80% per year on average, a rate that underperforms approximately 94.22% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -35.10%, which underperforms approximately 95.85% of global competitors.

Conclusion

Considering Lufax Holding Ltd's current dividend yield, payout ratio, and the challenging growth metrics, investors should closely monitor these aspects to gauge the future sustainability of dividends. The high forward dividend yield suggests optimism, but the underlying financial health and growth prospects present a more complex picture. For those interested in high-dividend yield stocks, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.

This article first appeared on GuruFocus.

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info